It was the end of 1999. Everyone at Ultratech Stepper, a semiconductor equipment manufacturer, was ready to slide gracefully into the New Year. Then two weeks before Christmas a large package was delivered from the SEC. It was a surprise but it was no Christmas present, potentially radically changing the way the company did business.

Staff Accounting Bulletin #101 threatened to turn traditional industry- wide accounting practices upside down. The common practice, with many large equipment manufacturers, had been to ship equipment, recognize revenue, collect payment and have customers hold back a percentage until they were satisfied with their installation. The new ruling would require that the company not show any revenue until the equipment was fully accepted and signed off by the customer.

Bruce Wright, Ultratech Stepper CFO, was the man on the spot. He saw that the potential for damage was enormous - basically the company stood, in a worst-case scenario, to show no revenue for the first quarter. His first reaction was to resist. Marshalling support from others in the industry, complaints were made to Congress and twice the SEC pushed back the deadline. What the outside world saw was a classic stall and defend strategy. Inside Ultratech Stepper, there was much more going on.

Maybe it had something to do with Wright's hobby of playing strategy games. Knowing he might lose the battle, he focused on winning the war. He looked for a way to reduce losses and find opportunity in the disruption.

A series of meetings with the company's outside auditor told Wright that ultimately the ruling was inevitable. Wright had to move quickly to inform the CEO and the Management Team. They had the choice to resist the ruling or move quickly to adopt the ruling and implement it in a manner which would benefit the company from an operational and accounting perspective.

This became an opportunity for the company to adopt new management strategies. To assure that sign-off from the customer could be achieved in a timely manner, increased dialog was created at the front-end of the deal to make sure that all potential aspects of the sale were understood and mutually agreed upon. Due to this rigorous process at the front-end, acceptance was actually accelerated resulting in the ability to recognize revenue earlier in the business cycle.

Where there had been concern that the customers would take this as an opportunity to extort concessions and discounts, the opposite turned out to be true. As everyone got involved, the company ended up working much more in partnership with their customers. As a result, Ultratech Stepper enhanced their reputation as a customer-oriented supplier.

What are the rules for this kind of leadership?

			Make no assumptions
			Get outside information and validation
			Examine all the options, even those that don't look promising
			Be prepared to lose the battle and win the war
			Get the entire team involved
			Recognize that there is always potential for improvement